Strong or Weak Currency For Sillypore?

[Dark Knight]

Is Sillypore better off with a strong currency?

Does it really benefits the lives of local Sillyporens if our currency is strong?
Most countries, if given a choice, would actually opt for a weaker, rather than a stronger currency. Sounds absurd, right?

Do you agree with the following conclusion?

To summarize:
Strong currency

Advantages:
Results in cheaper imported goods, thus exerting a downward pressure on imported inflation;
Forces domestic producers to improve their efficiency in order to compete in the international market.

Disadvantages:
Makes exports uncompetitive in the international market, thus hurting export industries;
Aggravates unemployment problems;
Induces consumers to buy more imported goods, thereby:
hurting domestic industries; and
causing higher currency outflow.


Weak currency

Advantages:
Makes exports cheaper, resulting in:
higher export volume and lower production costs, due to economy of scale;
improved balance of trade; and
higher employment level;

Discourages consumers from buying imported goods, thereby:
benefitting domestic industries; and
resulting in lower currency outflow.

Disadvantages:
Causes imported inflation, i.e. products using imported content will become expensive, thus affecting general price levels.

Currency undervaluation has been said to be a “beggar-thy-neighbor” policy because it:
improves domestic trade balance; and
adversely affects the trade balances of other countries.

Conversely, currency overvaluation is said to be a “beggar-thyself” policy.

 

[enterprise2]

Is Sillypore better off with a strong currency?

Does it really benefits the lives of local Sillyporens if our currency is strong?
Most countries, if given a choice, would actually opt for a weaker, rather than a stronger currency. Sounds absurd, right?

Do you agree with the following conclusion?

To summarize:
Strong currency

Advantages:
Results in cheaper imported goods, thus exerting a downward pressure on imported inflation;
Forces domestic producers to improve their efficiency in order to compete in the international market.

Disadvantages:
Makes exports uncompetitive in the international market, thus hurting export industries;
Aggravates unemployment problems;
Induces consumers to buy more imported goods, thereby:
hurting domestic industries; and
causing higher currency outflow.


Weak currency

Advantages:
Makes exports cheaper, resulting in:
higher export volume and lower production costs, due to economy of scale;
improved balance of trade; and
higher employment level;

Discourages consumers from buying imported goods, thereby:
benefitting domestic industries; and
resulting in lower currency outflow.

Disadvantages:
Causes imported inflation, i.e. products using imported content will become expensive, thus affecting general price levels.

Currency undervaluation has been said to be a “beggar-thy-neighbor” policy because it:
improves domestic trade balance; and
adversely affects the trade balances of other countries.

Conversely, currency overvaluation is said to be a “beggar-thyself” policy.

The worst case scenario is where we have a strong $ and high inflation. The only advantage for us is when we travel, we get more bang for our $.

 

[eatshitndie]

one of the main reasons: maintain a strong sgd to keep construction cost low in lieu of competing demands in china for same materials for local and foreign property developers and investors in order to fuel a real estate boom (and bubble) and maximize profit for landlords and developers of which the gov is a big part of.

 

[watchman8]

A strong sgd does not bring about low inflation of imported goods for consumers, as prices then to be sticky downwards, meaning shops don't like to lower prices even if the cost of goods is now lower.

A strong sgd helps the country purchase foreign assets, but this mean benefits the rich and sovereign wealth fund.

 

[Dark Knight]

Having a strong SGD can be double edge sword.
It will benefit our import but when it comes to exporting we will be worse off.
Sillypore's GDP still relies on certain percentage of exported goods and it's going down hill.

 

[watchman8]

Having a strong SGD can be double edge sword.
It will benefit our import but when it comes to exporting we will be worse off.
Sillypore's GDP still relies on certain percentage of exported goods and it's going down hill.

I don't think so as many of exported products are in usd. The oil related products and drugs are two major industries selling in usd.

The other manufacturing in sinkieland are more of less dead, killed by high rentals, COE etc.

 

[Devil Within]

To summarize:
Strong currency

Disadvantages:
Makes exports uncompetitive in the international market, thus hurting export industries;
Aggravates unemployment problems;
Induces consumers to buy more imported goods, thereby:
hurting domestic industries; and
causing higher currency outflow.
.

These are bullshit nonsense promoted by the Keynesians nut-head witch doctors.
1."Makes exports uncompetitive in the international market, thus hurting export industries";- This does not apply to Singapore as it's production mat'ls are all imported and will only help if we can get it cheap. Our only cost are manpower and maybe rentals which are controlled by the gov as gov is the largest land owner which control supply(land) and demand(foreigner buyers).

Even for countries that produces raw mat'ls, a stronger currencies won't hurt them as raw mat'ls has it's intrinsic values. The way to reduce cost is to be more productive. Germany has high cost of labour, but that doesn't stops China's poor wanting to own a German made car. Also, Germany's machines are well know for it's quality and durability. So it's not just price that dictates whether a product can sell or not. If price is the only factor for competition, then some of the poorest countries in Africa will be the largest producers as they can work almost for free. They can work just for a meal. But do you see them become a rich country?

2. "Aggravates unemployment problems"; Again, Keynesians nonsense of putting the cart before the horse. Currency deflation can occur during recession. But that does not means deflation means recession. Deflation is a symptom of recession but it's not the cause. Saying deflation will cause recession is pure nonsense by the Keynesians witch doctors. High productivity can also cause price deflation and cheaper price. Just like how mobile phones and LED TVs getting cheaper because of productivity. But you won't see demand going down when people have the money to buy it. On the contrary, cheaper prices see higher demand.

3.Induces consumers to buy more imported goods, thereby: Pure nonsense! Demand will ALWAYS be there! It's when people have no money, then they can't buy it. If I can afford a jet plane, I'll buy it! Having strong currencies allows consumers having stronger purchasing powers to buy more stuff. What's the point of having Trillions of dollars but weak or no purchasing power just like Zimbabwe? Zimbabwe printed so much money to inflate it's market that it's currency became useless where no one wants it.

4."hurting domestic industries". Again, look at point 3. Strong currency increases purchasing power will only help domestic market. Only when people have no jobs and no money to spent will it hurt domestic market. To retain job competitive, you will have to be innovative and become more productive. Just look at Germany and some of the other innovative and creative producing companies.

5."causing higher currency outflow". While this may be true to some extent, however, it is not a one way street. Currency flow in and out and there will be fund managers hedging currency risk to balance out what goes out, comes in. The way to balance this out flow is to become innovative and productive in our products. Having weak currency will only rob hardworking workers of their purchasing powers.